Existing-Home Sales Rise 10%

NEW YORK (TheStreet) -- Existing-home sales rebounded 10% in September to a better-than-expected seasonally adjusted annual rate of 4.53 million units, the National Association of Realtors said Monday morning.

John Canally, economist for LPL Financial, expected "some kind of pop" in existing-home sales data for September, and pointed out that we are now finally past the bursting of the first-time homebuyers tax credit bubble. "The data now stands on its own, which is good," he said. "There had been a lot of distortion."

Ahead of the report he told TheStreet a small increase in existing-home sales would be welcome news but that a sustainable rebound is still a long way away. He said market watchers should pay close attention to home inventories, as well as sales and prices. Existing-home inventories are well off their highs but still very high by historical standards, Canally explained.

The U.S. housing market has been "bouncing along the bottom on home sales since early 2009," Canally added, and while conditions have improved since then the market remains "kind of directionless."

"We need to see good, positive non-government-sponsored momentum in the housing market," he said.

The wild card in the housing market has become the unraveling foreclosure mess, the economist said, and how it will impact the housing market.

A report on new-home sales in July is due to be released on Friday. The consensus call is for sales of newly-built homes to have risen to a seasonally adjusted annual rate of 291,000 in August according to estimates from Briefing.com.

"Will banks take their eyes off the ball in terms of lending to focus on redocumenting already-foreclosed upon loans?" he asked. "I'd like to think rates are going to be low with quantitative easing, but worries about crossing Ts and dotting Is would slow the healing process down."

Just as the subprime mortgage troubles expanded into a total housing market downfall, the latest scandal in the home loan industry has expaned into a nationwide political firing line aimed -- once again -- toward the banks due to problems with foreclosure filings, dubbed "robo-signing."

Record-low and near-record-low mortgage rates failed to spark robust demand for housing in recent months, prompting many homeowners to refinance their existing mortgages rather than purchase new or previously owned homes.

Stocks in the homebuilder sector were mostly higher. The SPDR S&P Homebuilders, an exchange-traded fund that tracks the homebuilder sector, rose 2% while the iShares Dow Jones US Home Construction pushed up 2%.